Physicians Protest Medicaid, CHIP Cuts

Leaders of organized medicine in Texas warned state officials that further cuts in payments to physicians for treating patients in Medicaid and in the Children's Health Insurance Program (CHIP) will only make it harder for patients to find the medical care they need. And that, they say, will increase, not decrease, costs.

Even small cuts in Medicaid and CHIP payments "will result in more physicians restricting their Medicaid participation, thus exacerbating the challenges patients face in finding a participating physician," they said in a Jan. 7letter to the Texas Health and Human Service Commission(HHSC).That letter expressed their "deepest concern about the proposed 1-percent budget reduction for Medicaid and CHIP physician services." They added that "as more physicians leave Medicaid, the rate cuts undoubtedly will contribute to higher Medicaid and CHIP costs because more patients will have no choice but to rely on costly hospital emergency rooms (ERs) for care."

Texas Medical Association President Susan Rudd Bailey, MD, and the presidents of the specialty societies representing anesthesiologists, cardiologists, emergency physicians, family physicians, pathologists, pediatricians, gastroenterologists, internists, neurologists, obstetricians and gynecologists, ophthalmologists, orthopedists, otolaryngologists, pathologists, psychiatrists, radiologists, and urologists, as well as the president of the Texas Medical Group Management Association, signed the Jan. 7 letter.

They sent the letter after state officials announced in December that fees paid to physicians, hospitals, dentists, and other acute care providers for treating patients in Medicaid and CHIP would drop another 1 percent Feb. 1 as the state makes more spending cuts to deal with a $30 billion budget shortfall. Nursing homes will see a 2-percent reduction. The fee cuts are in addition to reductions that may occur as a result of periodic updates to the relative value units (RVUs) associated with Medicaid payable CPT codes.

Medicaid acute care and CHIP fees were cut 1 percent last Sept. 1 after leaders directed state agencies to cut their budgets by 5 percent. Then on Dec. 6, Gov. Rick Perry, Lt. Gov. David Dewhurst, and House Speaker Joe Straus sent a letter [PDF] to state agency heads directing them to identify another 2.5-percent reduction in spending for the remainder of the 2011 fiscal year.

In the Jan. 7 letter, the physician leaders said they understand the seriousness of the state's budget problems, but recommended officials use a "scalpel vs. a cleaver to close the budget gap." They said one of the best ways to limit Medicaid and CHIP growth "is to broaden physician participation in these programs," noting that a 2007 HHSC analysis "found that the state could have saved $26 million by redirecting patients with minor illnesses to a physician from an emergency room. On average, the state pays about $36 for a physician office visit vs. $144 for an ER visit, excluding the costs of drugs, lab, and x-ray."

The physicians say in their letter that they "understand why a nominal Medicaid payment cut for physicians might appear reasonable. However, current Medicaid rates do not cover physicians' practice costs. As with any small business, those costs increase each year. Medicaid rates lag woefully behind all other payers, making the program less and less competitive. On average, Medicaid pays about 80 percent of Medicare and about 50 percent of commercial insurance payments. For busy practices already juggling more demand than they can handle from privately insured patients, it just does not make economic sense to add more patients from a low-paying program like Medicaid or CHIP. Further, physicians, unlike hospitals, have no ability to partially recover some of the losses through federal funding programs.

The letter concludes by saying Texas physicians "stand ready to work closely with you to evaluate cost-containment alternatives that will continue to ensure our Medicaid and CHIP patients can obtain timely medical care."